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QuickBooks cannot use FIFO or LIFO methods. If inventory is enabled, QuickBooks uses the average cost method to determine the value of inventory. Click “OK” to set your default inventory preferences. Then set any additional default settings needed for inventory and items. To the right, click the “Company Preferences” tab and make sure the “Inventory and purchase orders are active” checkbox is selected in order to enable inventory-related features in your QuickBooks company file. In the “Preferences” dialog box, select “Items & Inventory” from the scroll box at the left side of the window.
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You can enable inventory within your company file and view the default inventory preferences, by selecting “Edit| Preferences…” from the Menu Bar.
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